Shepherd v Williamson & Anor [2010] EWHC 2375 (Ch) (24 September 2010)

Shepherd v Williamson & Anor [2010] EWHC 2375 (Ch) (24 September 2010)

The court found that Phoenix Contracts (Leicester) Limited became a quasi-partnership after Mr Walker's departure, with an understanding that both Mr Shepherd and Mr Williamson would be working directors and shareholders. Mr Williamson's conduct in suspending, excluding, and attempting to remove Mr Shepherd, and in withholding his bonus, was unfairly prejudicial and engineered to force Mr Shepherd out and acquire his shares at an undervalue. Article 8.11 could not be invoked to compel a share sale at the fixed price where the member's departure was unfairly orchestrated. Mr Shepherd's protected disclosure was made in good faith and did not justify his exclusion. The extra share was held...

Citation
[2010] EWHC 2375 (Ch)
Parties
Petitioner: Martin Shepherd; First Respondent: Michael Roy Williamson; Second Respondent: Phoenix Contracts (Leicester) Limited
Jurisdiction
England and Wales
Judgment Date
24 September 2010
Procedural Posture
Unfair Prejudice Petition Under Companies Act 2006 S.994 / High Court Trial Judgment
Outcome
Petition upheld. Relief granted for unfair prejudice.
Legal Topics
Unfair Prejudice, Quasi Partnership, Shareholder Disputes, Protected Disclosure (whistleblowing), Director Duties, Redundancy, Bonus Payment, Articles of Association Interpretation
Company Law Employment Law Unfair Prejudice Quasi Partnership Shareholder Disputes Protected Disclosure (whistleblowing) Director Duties Redundancy +2 more

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Parties

Martin Shepherd

Petitioner

Michael Roy Williamson

First Respondent

Phoenix Contracts (Leicester) Limited

Second Respondent

Procedural Posture

Unfair Prejudice Petition Under Companies Act 2006 S.994 / High Court Trial Judgment

Legal Issues

  1. 1 Whether the affairs of Phoenix Contracts (Leicester) Limited were conducted in a manner unfairly prejudicial to Mr Shepherd's interests as a member under s.994 Companies Act 2006
  2. 2 Whether Mr Shepherd's exclusion from management, suspension, and redundancy were unfair and contrived
  3. 3 Whether Mr Shepherd's protected disclosure justified his treatment

Ratio Decidendi

The court found that Phoenix Contracts (Leicester) Limited became a quasi-partnership after Mr Walker's departure, with an understanding that both Mr Shepherd and Mr Williamson would be working directors and shareholders. Mr Williamson's conduct in suspending, excluding, and attempting to remove Mr Shepherd, and in withholding his bonus, was unfairly prejudicial and engineered to force Mr Shepherd out and acquire his shares at an undervalue. Article 8.11 could not be invoked to compel a share sale at the fixed price where the member's departure was unfairly orchestrated. Mr Shepherd's protected disclosure was made in good faith and did not justify his exclusion. The extra share was held...

Court Disposition

Petition upheld. Relief granted for unfair prejudice.

Orders

  • Mr Williamson to purchase Mr Shepherd's shares at fair value, not the fixed price under Article 8.11.
  • Credit to be given for Mr Shepherd's share of the extra share acquired from Mr Walker.